Nvidia (NASDAQ: NVDA) shares declined approximately 2.5% on Thursday, mirroring a broad downturn in the semiconductor sector, even as the company announced new artificial intelligence partnerships and products aimed at expanding its presence in Japan. The stock traded at $207.27 in midday trading, aligning with the broader chip industry's performance, as the PHLX Semiconductor Index also fell 2.5%.
The decline comes amid ongoing investor concerns about the sustainability of Big Tech spending on AI infrastructure, a theme that has weighed on Nvidia's valuation in recent months. To address this, Nvidia has been actively diversifying its customer base beyond its largest U.S. cloud computing clients, with a growing focus on sovereign AI initiatives.
Nvidia to Supply Chips for Japanese AI Alliance
Nvidia announced it will provide AI chips and computing infrastructure to Noetra, a government-backed Japanese AI initiative supported by companies including SoftBank, Sony, and Honda. Under the initial deployment, Noetra will install 13,750 Nvidia Vera central processing units and 27,500 Nvidia Rubin graphics processing units, providing 140 megawatts of data center capacity. Financial terms of the agreement were not disclosed.
While this deployment is modest compared with the hundreds of thousands of chips Nvidia sells to its largest U.S. customers, the company has identified sovereign AI as a growing business segment. Nvidia reported that revenue from sovereign AI—government-backed efforts to develop independent AI capabilities—more than tripled year over year to over $30 billion in fiscal 2026, and the company expects further growth from this segment.
Company Expands Physical AI Initiatives
Separately, Nvidia announced collaborations with several Japanese companies focused on physical AI, which encompasses robotics, autonomous driving, and other real-world AI applications. The company introduced two new supercomputing modules, the T3000 and T2000, based on its Thor computing architecture, designed to support mass-market robotics.
On Wednesday, Nvidia also unveiled Cosmos 3 Edge, a new AI model for robots and vision AI agents. According to the company, Cosmos 3 Edge is a world model designed to help AI systems perceive and navigate physical environments in real time, learning from a broader range of inputs than large language models. This launch follows the introduction of Cosmos 3 in May.
Japan Expansion Takes Center Stage
The announcements coincide with Chief Executive Jensen Huang's two-day visit to Japan, where Nvidia is expanding its physical AI ecosystem. Fujitsu, Hitachi, and Kawasaki Heavy Industries intend to join a coalition aimed at advancing physical AI technologies in Japan. “The next frontier of AI is in the physical world, and this is a once-in-a-generation opportunity for Japan,” Huang said in a Wednesday statement. “Japan invented modern manufacturing. Now, it has the opportunity to reinvent it for the age of intelligent industries.”
Nvidia's latest initiatives build on broader investment in Japan's AI ecosystem. The company's partnerships come months after Microsoft announced a $10 billion investment in Japan to expand AI infrastructure and strengthen cybersecurity. SoftBank has also increased its investments in artificial intelligence and is seeking to partner with Microsoft and Sakura Internet to advance AI development in the country. According to the International Trade Administration, Japan's artificial intelligence market is expected to reach $27.9 billion by 2029, driven by the Japanese government's efforts to promote AI adoption across industries and the willingness of domestic companies to pursue international partnerships.
For more on Nvidia's strategic moves, see Nvidia's Japan Robotics Alliance: A Quiet Bet on Physical AI's Next Frontier and Trump's Portfolio Managers Favor Nvidia Over Micron in AI Bet.
This article is for informational purposes only and does not constitute financial advice.
